Tuesday, May 02, 2017

You may have seen these charts before, but they tell the story of a middle class in decline.

For any system to endure, it must maintain a built-in capacity to self-correct: that is, it must generate accurate informational feedback about dangerous asymmetries and auto-correct with behavioral feedback.

This is true of ecosystems and enterprises as well as political/social systems.

Human systems can lose the ability to self-correct in three basic ways.

1. The information feedback is no longer accurate because self-serving interests manipulate the data to maintain whatever narrative/data-flow supports their power, wealth and income.

3. Those in positions of responsibility who are tasked with managing behavioral feedback are no longer accountable, so the needed behavioral feedback fails.

Self-serving interests committed to protecting their power, wealth and income have destroyed our economic-political system's ability to self-correct. There are many examples of these three dynamics; here are a few.

A law enforcement/judiciary system that has plenty of resources to pursue a costly, destructive, failed War on Drugs, but no resources to pursue white-collar financial crime. Have a low-level drug dealer in your sights? Hey, the DEA et al. have essentially unlimited resources to nail the perp: SWAT teams, surveillance, helicopters, you name it.

But when a bank embezzles/defrauds to the tune of $100 million, law enforcement and the judiciary throw up their hands: it's too complicated and costs too much. Really? So there's billions of dollars available to bust small-time drug dealers, but only pennies to pursue financial criminals stealing billions?

Financial rackets, fraud and embezzlement are now rewarded rather than punished. If a bank scams $100 million by rigging a market (for example), if the Feds even catch on the fine is a measely $10 million.

In effect, finance-based criminals are being told: go ahead and run your rackets--we'll impose a 10% fee on your skim.

I am honored to share a remarkable data base of Corporate Fines and Settlements from the early 1990s to the present compiled by Jon Morse. Here is Jon's description of his project to assemble a comprehensive list of all corporate fines and settlements that can be verified by media reports:

"This spreadsheet is all the corporate fines/settlements I’ve been able to find sourced articles about, mostly in the period from the 1990’s up to today (with a few 80’s and 70’s). This is by far the most comprehensive list of such things online. At least that I could find, because the lack of any decent list is what made me start compiling this list in the first place."

What struck me was the sheer number of corporate violations of laws and regulations--thousands upon thousands, the vast majority of which occurred since corporate profits began their incredible ascent in the early 2000s--and the list of those paying hundreds of millions of dollars in fines and settlements, which reads like a who's who of Corporate America and Top 100 Global Corporations.

I encourage you to open one of the three alphabetical tabs at the bottom of the spreadsheet on Google Docs and scroll down to find your favorite super-profitable corporation.

Many have a long list of fines and settlements, and many of the fines are in excess of $100 million. Many are for blatant cartel price-fixing, not disclosing the dangers of the company's heavily promoted medications, destroying documents to thwart an investigation of wrong-doing, etc.

In other words, these were not wrist-slaps for minor oversights of complex regulations-- these are blatant violations of core laws of the land.

Correspondent Ron G. summarized a core reason why the status quo can no longer self-correct politically: the middle class has been so diminished, it has lost its essential function as a political counter-balance to the financial-political elites:

"The American economy and people are not being served by a government that was designed to be a Democratic Republic, whose architecture and balance of power depended on a property-owning middle class to be the countervailing force against Oligarchy; given the irreversible nature of the market and technology that contributed to the decline of the US middle class, (globalization, automation and AI), it is apparent that we will stay on this downward track of the middle class for the immediate future, and therefore more disparity, dispossession, and coercion will be needed to maintain control, and to me this means a future of intimidation, censorship and continued involuntary servitude."

You may have seen these charts before, but they tell the story of a middle class in decline: declining income, declining wealth and declining political influence as the elites (the few) rig elections (bye-bye Bernie), control the dominant narratives (official "fake news" isn't fake news, it's from the Ministry of Truth!) and siphon off the nation's wealth at the expense of the many.

Bread (SSI, welfare, Universal Basic Income, etc.), circuses (the corporate media, social media, etc.) and social "progressive" crumbs (gender-neutral bathrooms, etc.) are highly effective means to distract us from the core dynamic of our status quo: the transformation of our middle-class society to a neofeudal society of New Nobility, debt-serfs and a bread-and-circus-consuming lumpen-proletariat class.

Rather than address this rising inequality directly, the self-serving Elites have promoted propaganda and policies that protect their gains while obfuscating the reality that most American households have been losing ground for decades, a decline that has been masked by replacing real income with rising debt.

The rapid concentration of wealth has also concentrated political power in the hands of a few who seamlessly combine public and private modes of power.

This wealth and power protects the self-serving Elites from the perverse consequences of their dominance. Their precious offspring rarely serve at the point of the American military's spear, they never lose their jobs or income when corporations shift production (and R&D, etc.) overseas, and they are never replaced with illegal immigrants paid under the table.

The self-serving elites' accountability? Zero.

Systems that lose their ability to self-correct collapse. The self-serving elites and fiefdoms that have crippled the system's feedback mechanisms to protect their power, wealth and income think they're "winning" by imposing a new neofeudal order. But all they're really doing is insuring the demise of the entire system.

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